Burberry Announces More Plans to Simplify as Sales and Profits Fall

Just like many of us may have KonMari'd our households over the past year, Burberry Chief Creative and Chief Executive Officer Christopher Bailey has announced plans to seriously tidy things up at the label, from fashion show scheduling to product assortment to internal operations.

On Wednesday, the British heritage brand released its preliminary results for the year ending March 31, 2016. And, once again, they weren't great: Comparable sales were down 1 percent while profit declined 10 percent. That performance reflected a challenging environment for the luxury sector as a whole according to the brand; but rather than harp on the Chinese tourism slowdown that it and other companies have lamented for the past year, Burberry outlined how it plans to rejigger its business to adapt to the changing market during its webcast earnings presentation.

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First, Bailey pointed to the brand's well-known digital strengths: E-commerce sales were up in all regions, and partnerships with companies like Snapchat, WeChat and Google helped drive a 30 percent increase in social media followers, he said. And his plans for increasing Burberry's productivity, saving money and driving growth will leverage that digital prowess while streamlining things overall, in line with already-announced decisions like showing men's and women's collections together in a "see now, buy now" format and consolidating all of its labels into one. Here's what else Burberry has planned:

Moving from "product breadth to product focus," meaning that Burberry will reduce its assortment of product by 15-20 percent, concentrating on improving products that it sees as having the most potential, like outerwear and handbags. We'll see "significant" changes in bags soon, Bailey says, with a focus on the patchwork and banner bags and the rucksack, ahead of "major new product launches" in 2018.

In retail, moving from "new space to productive space," i.e. opening fewer stores but improving those with the most potential. This will involve focusing more on local customers and less on tourists in destination cities. The brand will also relaunch Burberry.com and introduce a new mobile app, since 50 percent of e-commerce growth last year was fueled by mobile.

Making sure processes are more productive, and that the organization is the right "size and shape." That involves stuff like "reducing complexity, "simplify[ing] how we work" and "eliminat[ing] duplication" in the workforce. In other words, layoffs sound like a strong possibility.

Bailey said these changes would result in cost savings of at least £100m by 2019.

Burberry has been heralded for its strong, clear brand message; outstanding social media presence; and success in attracting customers overseas.
But could those same characteristics now be hurting the British heritage brand? And others like it?